retail news in context, analysis with attitude

Bloomberg’s always reliable Matthew Boyle has a story about how an internal Walmart memo indicates that visits to the retailer’s US stores - open at least a year - were down 2.6 percent from February through June of this year ... a trend that does speak well about the short term impact of the company’s much-vaunted efforts to reverse eight straight quarters of stagnant same store sales.

“Those Wal-Mart stores had 82.8 million fewer visits through the first five months of the company’s fiscal year than a year earlier, says the memo, which was obtained by Bloomberg News. Wal-Mart doesn’t disclose those traffic numbers, and David
Tovar, a spokesman, declined to comment on the memo.”

Analysts say that Walmart continues to suffer from two trends - low-income families that have less money to shop as the impact of the recession continues to be felt, and everybody else deciding to shop elsewhere.

As a matter of comparison, Bloomberg reports, Walmart’s “traffic decline comes as some of its direct competitors are getting more visits.

“Kroger Co., the largest U.S. supermarket chain, boosted traffic in each of the previous three quarters. Dollar General Corp., the biggest dollar discount chain in the U.S., has increased traffic for 13 straight quarters, the company said June 1. At Target Corp., traffic rose for six consecutive quarters before falling in the first quarter of 2011.”
KC's View:
Analysts say that Walmart has a price and value perception problem that is working against its efforts to bring in more customers - and that the issue of selection has not really been the problem, despite the fact that Walmart has made a big deal out of adding products back in after its editing process fell flat.

It creates an interesting dynamic for the Bentonville Behemoth. On the one hand, it is opening small stores, creating new formats, developing an urban strategy, acquiring chains in places like South Africa, and forging ahead with e-commerce, sustainability and healthy food initiatives, while at the same time desperately trying to figure out how to generate more traffic and sales out of its existing fleet of US stores. It is almost like how a magician tries to distract you with one hand while the real trick is happening elsewhere.

Can Walmart’s existing management pull a rabbit out of its hat? And how long will it be before the board - urged on by the clamoring of investors - decides that a change is needed at the top?